We are confident that the lawsuit filed in Los Angeles last week is without merit, and that LegalZoom will be vindicated in a court of law. LegalZoom does not provide legal advice or misrepresent our products and services in any way. Despite the lawsuit, LegalZoom continues to operate in California and all 50 states, providing more than 100 products and services to those seeking affordable help.

LegalZoom has been reviewed by legal authorities in California, and in many other states, and we have never been found to be in violation of the law.

Katherine Webster sued as executor of the estate of Anthony Ferrantino and trustee of the Anthony J. Ferrantino Living Trust. . . .

Webster claims the defendants failed to comply with laws and regulations governing practice of law in California, led customers to practice law without a license, assisted in unauthorized practice of law, and used fraudulent business practices. She seeks disgorgement and punitive damages for negligence, elder financial abuse, consumer law violations and illegal and unfair business practices.

Brian Ellexson, LegalZoom Class Action Lawsuit, Elia Ellexson PLLC, June 4, 2010 (“Do you think this will help clients see the danger of using LegalZoom for DIY estate planning? I have a feeling that our profession still has a lot of education to do before we get to that point”).

Note that this suit is not the first legal challenge that LegalZoom has faced. A February 19, 2010 ABA Journal post reports that

LegalZoom is facing a potential class action that claims the company is unlawfully charging consumers for the preparation of legal documents.

An amended class action petition(documents posted by IP Watchdog) filed in January seeks a refund of all fees paid to LegalZoom by Missouri consumers. The company is seeking to remove the suit to federal court, according to IP Watchdog. . . .

Brian Liu, a lawyer who is co-founder and chairman of LegalZoom, spoke to the ABA Journal about the lawsuit for an article expected to be published in an upcoming issue of the magazine. “LegalZoom is aware of the Missouri lawsuit and is confident we have not violated any laws,” he said. “Class actions of this nature are common tactics of plaintiffs' attorneys. We intend to vigorously defend the plaintiffs' claims.”

My conclusion is that I am undecided on whether LegalZoom is my competitor, but I will keep having the discussion about DIY estate planning, because I think it's dangerous, and because I think that people are paying money for a false sense of security.

LegalZoom and other do-it-yourself document preparation services want you to believe that the process of preparing a will is as easy as filling in the blanks on standardized forms. . . .

In short, despite a disclaimer that their document preparation services are not a substitute for the advice of an attorney, they try to convince you that the advice of an attorney is simply not necessary. . . .

On the top left-hand corner of the page, LegalZoom reveals that 80 percent of people who fill in blank forms to create legal documents do so incorrectly. Despite this dislaimer, LegalZoom tries to reassure its customers that professionals are there to help; that customers can have “peace of mind” knowing that LegalZoom professionals will customize their will based on their legal decisions.

Combs’s article is especially interesting because it links to and comments on a will that Gregory Luce, the Practice Development Director at the Minnesota State Bar, created using LegalZoom. Combs adds to the list of problems with this will:

Below is a summary of just a few of the ones mentioned by some attorneys who commented:

It failed to include an alternate trustee in the event the named trustee predeceases him or is unable or unwilling to serve.

It failed to include a self-proving affidavit, which means that witnesses would have to be tracked down in the event of his death to testify to the validity of the will.

It failed to provide guidance about beneficiary designations on non-probate assets which pass outside the will.

It failed to include a provision that would allow him to direct the disposition of personal property in a separate document.

It failed to address the contingency of the death of his children, or the birth or adoption of a third child.

It failed to include spendthrift provision in any of the trusts, which protect the trust assets from the trust beneficiary’s creditors.

One problem I noticed which was not mentioned in the comments was that the will potentially disinherited Greg’s oldest child by bequeathing 100 percent of his gross estate to his current wife.

There are other articles on the dangers of DIY estate planning. Here are a few (listed in chronological order):

Rania Combs, Planning Your Estate? Don’t Be Penny Wise And Pound Foolish, Texas Wills & Trusts Law Online, Jan. 11, 2010 (“At times, we may be tempted to do the job ourselves or to hire the cheapest service provider to do the work, only to realize at a later date that it probably would have been worth spending a bit more to have the job done right.”).